1.
To start a corporation in the U.S., it is necessary to file an application in one of the states. The legal document that the state approves is the

__________

articles of incorporation

.

2.
One of the advantages of the corporation form of business as opposed to a partnership form is the ease of transferring

__________

ownership

.

3.
At a corporation, Assets minus Liabilities is

__________

Stockholders' Equity

.

4.
Shares of stock that have been issued and have not been reacquired by the issuing corporation are called

__________

outstanding

shares.

5.
If a corporation has issued only one type of stock, it is

__________

common

stock.

6.
The type of stock that gets its dividend before the common stock gets its dividend is called

__________

preferred

stock.

7.
The holders of

__________

common

stock elect the corporation's board of directors.

8.
The par value of

__________

common

stock usually has no economic significance.

9.
The dividend on preferred stock is often expressed as a percentage. To calculate the annual dividend on preferred stock, you multiply the percentage times the

__________

par value

of the preferred stock.

10.
If a corporation issues 10% Preferred Stock $100 Par on a day when the financial markets demand 9%, this corporation's 10% Preferred Stock will sell for

__________

more

than its par value.

11.
If a common stock does not have a par value or a stated value, the entire proceeds from issuing the stock is credited to one account entitled

__________

Common Stock

.

12.
Stockholder's equity is subdivided into two major sections:

__________

paid-in capital

and

__________

retained earnings

.

13.
The net income of a corporation is closed to the

__________

Retained Earnings

account.

14.
Dividends declared by a corporation reduce the

__________

retained earnings

section of stockholders' equity.

15.

Dividends appear as an expense on the corporation's income statement.

True

Wrong.

Dividends are a distribution of earnings, they are not an expense.

False

Right!

16.

If the board of directors does not declare the regular quarterly divided on its common stock, the corporation's liabilities will include the omitted dividend.

True

Wrong.

Dividends become liabilities only if the board of directors declares them.

False

Right!

17.
The

__________

declaration

date is the date on which the corporation records a liability for its quarterly dividend.

18.
The

__________

record

date determines which stockholders will receive a declared dividend.

19.
If a corporation declares a small stock dividend, the account that will be reduced by a debit entry is

__________

Retained Earnings

.

20.
A stockholder will have the same number of shares after a 3-for-2 stock split or after a

__________

50%

% stock dividend.

21.
A corporation's own shares of stock that have been reacquired from its stockholders but have not been retired are called

__________

treasury stock

.

22.
The account, Treasury Stock, will have either a zero balance or a

__________

debit

(debit, credit) balance.

23.
If a share of treasury stock is sold for more than its cost, the difference is credited to

__________

Paid-in Capital from Treasury Stock

.

24.

Treasury stock sales can result in a loss on the corporation's income statement.

True

Wrong.

A corporation cannot report a loss (or a gain) on its income statement from the sale of its treasury stock.

False

Right!

25.
If preferred stockholders have the opportunity to receive more than the stated dividend percentage, the stock is described as

__________

participating

preferred stock.

26.
Dividends in arrears occur only on

__________

cumulative

preferred stock.

27.
Dividends in arrears are reported in the financial statements in the

__________

notes or footnotes

.

28.
If a preferred stock can be exchanged for a stated number of common shares, it is referred to as

__________

convertible

preferred stock.

29.
The book value per share of preferred stock is its

__________

call price

plus any dividends in

__________

arrears

.

30.
Earnings per share means earnings per share of

__________

common stock

.

31.
A debit balance in Retained Earnings will appear in stockholders' equity as

__________

deficit or accumulated deficit

.

32.
The

__________

board of directors

of a corporation declares the dividends.

33.
The directors of a corporation appoint

__________

officers

to carry out the corporation's policies and directives.

34.
When a small stock dividend is declared, the

__________

market

value of the new shares is transferred from Retained Earnings to paid-in capital accounts.

35.
A separate portion of stockholders' equity that reports certain gains and losses on hedges, foreign currency translations, and pension liabilities that were not part of net income shown on the income statement is

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